Chinese capital outflow to continue

Pantheon right again. 

The latest Chinese FX reserves data for May suggest an improving backdrop for the currency, rising to $3,128B, from $3,120B in April. This brings to an end the longest streak of declines in reserves since 2016. But the data flatter to deceive. The gain in reserves came during a period of renminbi weakness, and was driven by currency and asset valuation effects. Absent euro appreciation, and a rally in US fixed income, May would have seen another decline.

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